Choices for reducing the rate of interest on student education loans and reintroducing maintenance grants

Choices for reducing the rate of interest on student education loans and reintroducing maintenance grants

In the Prime Minister called for an inquiry into the student loan system for higher education (HE) october. In this briefing note, we give attention to two associated with more unpopular options that come with payday loans online illinois the system that is current. We explore federal government alternatives for decreasing the rates of interest charged on student education loans, through the present quantities of RPI + 3% while learning and RPI + 0–3% (dependent on earnings) after leaving college, and for reintroducing living-cost grants – which do not need to be repaid – for students from lower-income families. This briefing note will be submitted as proof when it comes to inquiry.

Key findings

  • Positive interest that is real on pupil loans boost the financial obligation quantities of all graduates but just raise the lifetime repayments of higher-earning graduates. Eliminating them will not impact up-front government investing it does slightly increase the deficit (due to the slightly confusing treatment of interest accrued on student debt in the government finances) on HE, but. More significantly, additionally advances the long-run expenses of HE as a result of linked reduction in graduate repayments.